Read the Daily Market Report from Dave Evans, Professional Trader
Pound recovers after downgrade shock Morning Report: 08.30 London• This morning, the two main talking points are the pound’s reaction to the late Friday UK sovereign downgrade and the yen’s weakness following the probable appointment of Haruhiko Kuroda, who is expected to be a ’doveish’ Bank of Japan governor.
• Looking at the pound first, sterling is seeing a typical reaction to a sovereign downgrade – That of a knee jerk reaction lower, followed by a stabilisation that usually sees the market recover quickly. Financial markets are forward looking and as such, a downgrade has already been mostly priced in. After gapping lower at the open, the GBP/USD now back to break even, with the GBP/JPY up 0.73%.
• The yen pairs are seeing the biggest moves this morning, with the yen hitting its lowest level against the US dollar since April 2010. The USD/JPY is up 0.77%, while the EUR/JPY is the morning’s main mover, up 1.10%. The AUD/JPY is performing well after closing back above its short term moving average.
• Today we have the second day of Italian parliamentary elections.
• At 09.30, we have UK BBA mortgage approvals, followed by Bundesbank president Weidmann speaking at 15.30.
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Bet Idea:
• According to Stock Traders Almanac, the last three AAA ratings have actually been net positive for the country’s stock market in the longer term. Although there is no direct research on currency markets, a similar trade played out on the US dollar index following the US AAA downgrade.
Morning Report: 08.30 London• This morning, the two main talking points are the pound’s reaction to the late Friday UK sovereign downgrade and the yen’s weakness following the probable appointment of Haruhiko Kuroda, who is expected to be a ’doveish’ Bank of Japan governor.
• Looking at the pound first, sterling is seeing a typical reaction to a sovereign downgrade – That of a knee jerk reaction lower, followed by a stabilisation that usually sees the market recover quickly. Financial markets are forward looking and as such, a downgrade has already been mostly priced in. After gapping lower at the open, the GBP/USD now back to break even, with the GBP/JPY up 0.73%.
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• The yen pairs are seeing the biggest moves this morning, with the yen hitting its lowest level against the US dollar since April 2010. The USD/JPY is up 0.77%, while the EUR/JPY is the morning’s main mover, up 1.10%. The AUD/JPY is performing well after closing back above its short term moving average.
Click here to view full-sized image
Click here to view full-sized image
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Coming up today:
• Today we have the second day of Italian parliamentary elections.
• At 09.30, we have UK BBA mortgage approvals, followed by Bundesbank president Weidmann speaking at 15.30.
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Bet Idea:
• According to Stock Traders Almanac, the last three AAA ratings have actually been net positive for the country’s stock market in the longer term. Although there is no direct research on currency markets, a similar trade played out on the
US dollar index following the US AAA downgrade.
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• There are two potential trades we could play from here.
• The first is a HIGHER trade on the FTSE 100 predicting that it will close above 6500 in 364 days time. This could return 128% if successful.
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• The second is a HIGHER trade on the GBP/USD, predicting that is will close above 1.5500 in 6 months time (August 23rd) for a potential return of 145%.
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This is presented as an idea to stimulate fixed odds financial betting ideas and is not financial advice.
Summary:
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